Mr. Elgindy here is my reply to your incredibly preposterous notions. First lets agree you are a smart, savvy, experienced man with a wealth of experiences. And lets also agree that you cannot claim sudden naivety when you want people to believe your story.
1. 9-11
Why was this case brought to trial in New York, when I traded and lived in California, my servers were in Florida and my broker was in Canada? There was only one obvious reason. There could be no better place for the government to try an Arab American who “may” have known about 9-11 than in a jurisdiction next to ground zero. From that day until the verdicts were read, the dark cloud of 9-11 tainted every single aspect of this case. The words “terror” and “9-11” are mentioned over 350 times throughout the 37 day trial... Despite that, not once before or after the jury was empanelled, was anyone permitted to ask A SINGLE QUESTION of any juror about their feelings or possible involvement in 9-11
and/or its aftermath.
The question is why you did not dispute being extradited to New York. You certainly could have fought it. Everyone who was shorting knew that after 9-11 they would look for strange Shorting or Putting. It was in the papers and in the press. Unfortunately for you, when they did the quick check on your shorting, they found Royer. The only person that thinks this case has anything to do with 9-11 is you. The prosecutor suggested your liquidation was suspect, but everyone has since said they found no evidence to support any theories. You were convicted on evidence and circumstances that have nothing to do with 9-11….you might want to start dealing with that.
2. RICO
I was convicted by this NY jury of various securities related charges under a “RICO” indictment. In my case, the government prosecutors loosely connected a number of defendants to each other under the umbrella of RICO, a very powerful and frightening tool that was used to transform me from a well known, credible, partly comical and partly offensive hyperbole ranting trader into an enemy of the United States overnight. By utilizing RICO, the prosecutors were able to intimidate and frighten literally hundreds of witnesses, thereby ensuring that their fictitious allegations would be presented to a jury virtually unchallenged. This is the first time since May, 2002, that anyone has discussed any aspect of this case IN DEPTH publicly; not surprisingly it’s ME who is doing it now.
Mr. Elgindy you have high priced high profile attorneys. You were able to bring in any witnesses you needed. Nobody was intimidated. Are you saying that someone could have been brought in to testify about the facts that could have helped you? Of course not. Maybe you wanted to have more ego stroking about how wonderful you think you are, but that would have nothing to do with the charges against you.
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3. Actual Realized Gains / Victims
This case involved 6 stocks originally, but was later expanded to cover 41 unique stocks, thus forcing us to effectively defend 41 “mini-trials” within a trial. Factor in different defendants, a hedge fund or two, and the parameters become obscene. I was also charged with “extorting” 2 CEO’s of small scam companies for reasons that no one has ever offered. During the trial the government only managed to introduce “evidence” for 19 of the 41. Of these 19, I was convicted of only 4 of them. My calculated gains resulting from “inside trading” in these four add up to a little over $41,000.00. If one calculates the gains on all 19 mentioned but not proven to the jury, the amount tops out at approximately $160,000.00.
4 convictions out of 19 charges still makes you a criminal. Maybe you should spend more wasted energy telling us all how you are only partial pregnant.
Are you ready to admit your guilt on the 4?
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The Government was not unable to find any huge amounts of money made by me in any of these tiny scams that Cleveland and Royer searched, nor could they find any victims. They had no choice but to dig into minutia of thinly traded stocks that, on average, made me $10,000 each. The significance of these transactions are put in perspective by understanding that I made more trading HAND, the rival of PALM, than ALL of the stocks mentioned in the indictment combined. These thinly traded scam stocks were more for my entertainment than for profit.
You made more money honestly than you did through corrupt practices, congratulations; you might have wanted to figure that out a bit earlier.
This was part of the government’s strategy – confuse the jury, and then offer simplistic, contrived “explanations” to make them think they understood when they clearly didn’t. The jury was faced with an enormously complex case, which made it easier for them to be persuaded by the government’s pre-packaged account of the facts as well as the prosecutor’s own bias against short selling in general.
I was convicted even though I did exactly what I said I was going to do. No fraud, no testimony of fraud. Can you imagine a stock fraud prosecution in which the prosecutor never tells the jury the price at which the defendant bought or sold the stock? Where the prosecution never shows harm as a result of the trade, or puts a single “victim” of the alleged fraud on the witness stand?
Somehow I think the Prosecution did put forth a case. Lets check. Indeed they did they even won many of the charges. The jury seems pretty smart too; they did not convict you on everything. Based on the facts they said your were guilty of this, but not that. Mocking the jury as your are publicly, is bad form too.
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4. Royer and Cleveland
Royer testified in his defense. He testified that indeed I never asked or solicited any information from him. He testified that he did searches at Cleveland’s request, or as a result of his own curiosity in connection with a “legal purpose” that only he knew... Extremely experienced officers and agents believed this man. Everyone trusted this man. If trained, professional and veteran FBI agents, SEC attorneys and police officers believed in him when he was with the FBI and continued to do so after he left the FBI, how can I be held to a different standard? How was I better equipped to know he was “no good?” If anything, I was more easily impressed, more flattered and more trusting. I was honored that an agent of the world’s top law enforcement agency, the FBI, saw value in what I did. For their argument to be valid, it would have been necessary that I was a better judge of character than all of the experts.
Royer gave you non-public confidential information. You said you had actual FBI reports in hand. Remember what I said at the start, you suddenly cannot claim naivety. You cannot claim that a savvy investor such as yourself did not understand that confidential FBI reports, which were given to you, were OK for trading on.
That would be too stupid, and suddenly you a skeptic shorter, is a dumb trusting fool. I don’t buy it, you knew what you were doing was wrong. That is why you erased the logs. It’s a good thing you chickened out from taking the stand…any jury would have sniff out this slop of crappola you are peddling. Nice try and an excuse but it fails.
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If this trial proved anything at all, it was that Jeff Royer was indeed a rogue and possibly corrupt agent. The corrupt relationship, if in fact there was one, existed between Derrick Cleveland and Jeff Royer. I use the word “possible” because I have yet to understand where or how exactly Royer benefited.
A crime or corrupt relationship now has to have a benefit? Maybe you can go rob a bank but give all the money away to charity next….you have not benefited so its all OK.
The government initially alleged that payments in excess of $30,000.00 were made by me through Derrick Cleveland, for the purpose of corruptly inducing Royer to give me confidential FBI information. This theory was later abandoned when the government was unable to document a single red cent passing from me to Royer or anyone else for information. Unable to support their initial allegations that money was exchanged for information, the prosecution theory then morphed into allegations that the corrupt inducement was a “lucrative job offer.”
Agent Royer had been interested in working for me, and we did have serious discussions about that, but he wanted to live in Denver, near his children; I on the other hand, had little interest in an out of state employee. Discussions about possible employment therefore were not actively pursued, and Jeff Royer was never hired. He remained unemployed for the entire five months from his resignation from the FBI until the day he was arrested.
Royer worked in your office, you said you hired a former FBI guy, right? Royer while working at the FBI gave you tons and tons of confidential information, which either caused you to short a stock, or effected the way you traded the stock, Royer quits, and then after both you talking about the job with you, finds himself working in your office in San Diego. He quit his job to become unemployed, sure that could happen. How on earth can anyone conclude that Royer was working for you.
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Cleveland testified that Royer was to remain a secret source of information and that both he and I knew that. The evidence, however, showed the opposite. I routinely and readily admitted on the site that some information was received from Royer; our relationship was not kept secret because I believed I had nothing to hide. My criminal liability necessarily must depend upon a showing that I knew Jeff Royer breached a fiduciary duty to the FBI-which evidence simply does not exist. Had I known there was something illegal about Jeff Royer’s comments, why would I so openly discuss them on my site that was comprised of hundreds of members? Even more baffling, why would I tell my probation officer exactly who I was meeting with, and what I was doing? Why would I put in writing-to a federal law enforcement official no less-that which I believed to be illegal?
Obviously your ego would not let your mouth shut up. You bragged about how good your information was. Then after you thought for a moment, you realized you best erase the logs. Why is it you asked that FBI be purged from the logs? The obvious answer to everyone is you indeed knew what your were doing was wrong., and you wanted to remove the traces.
Mr. Elgindy your theory: “I am not a criminal because why would a criminal make mistakes like this” Is a novel theory. But sadly for you criminals make mistakes, and end up getting caught.
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5. SEVU
It was not until January 12, 2001 that Special Agent Royer told me that there were three investigations into SEVU. I then told the site members what he told me, verbatim, and then documented it in my notebook and sent it to my US probation officer . This investigation was MINE, all mine. I started it, and I provided all the information to the FBI.
Did you ask Royer if you should go and tell the site members about the confidential information that was given to you? You could have asked him, and he would have likely told you it was illegal. But you knew that, you are a smart guy.
In both the initial and superseding indictments, the prosecution repeatedly references this specific chat excerpt. On January 12, 2001, I identified in the chat room the three investigations into SEVU, and I made the comment “Hansen, erase the logs.” I said this as I stated in the chat room later, because I didn’t want to jeopardize an ongoing FBI investigation by having anyone posting this information on public message boards. Unfortunately it was already too late, since Ken Cook had made that information public 5 days earlier. In post # 17,954, long since deleted, and 5 days before January 12, after being debriefed by the FBI, Ken Cook announced that both the SEC and the FBI were investigating SEVU. Mr. Cook made this post on a public SEVU message board located at Raging Bull.com, a popular public site for stock traders to exchange information and opinions. His post was noticed immediately by site members and the following exchange occurred on January 7, 2001:
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I said this as I stated in the chat room later, because I didn’t want to jeopardize an ongoing FBI investigation by having anyone posting this information on public message boards”
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You clearly understand the information your are receiving from Royer is confidential and you understand the context of how it would effect trading. See I told you were smart.
When I remembered that Ken Cook had already made that public disclosure, I decided not to erase the chat logs-nor were they EVER erased-since we realized the information had already been made public in a public forum frequented by both SEVU shareholders and management. The jury was never told that the chat was not deleted. Robert Hansen incorrectly testified that he deleted this chat when in fact he had not done so. The prosecutors solicited this testimony, and then embraced it instead of correcting it.
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I dealt with 12 different Law Enforcement agents/officers regarding SEVU. The jury found me guilty of inside trading in SEVU... I reported my contacts with Law Enforcement and S/A Royer to my probation officer. Once again I am stumped and frustrated because I don’t know what I could have done differently. Something is very wrong with this picture.
Suddenly you think your probation officers can grant you the power to trade on insider information? Did you both to ask an attorney
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6. Misappropriation Theory
When I initiate an investigation that is beneficial to the investing public by exposing a fraud, I obviously possess an informational advantage as a result of my due diligence and hard work. However, under the misappropriation theory of insider trading with which I was charged, a person violates the law when he misappropriates material nonpublic information in breach of a fiduciary duty or similar relationship of trust and confidence and uses that information in a securities transaction.
You obviously had an informational advantage by Royer handing your FBI files.
The words “FBI” and “SEC” appear over 4000 times in chat and there was ONE deletion, eventually recovered. I am simply confused as to what I could have done differently.
How many time just “FBI”…20 or more? Nice try by putting SEC and FBI count together. But you are on record of having anything FBI deleted….not SEC.
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10. Spreading False and Misleading Statements
The Paul Brown accusation was the result of a routine criminal background search that was conducted by a site member on December 18, 2001 showing Paul Brown to be a convicted felon. The site member “Quack” testified that he sent me that information the next day, December 19, 2001. I then contacted the Idaho Dept. of Corrections, and on a taped, site-wide audio broadcast phone call confirmed with them that Paul Brown was indeed a convicted felon. It was only later that I learned that Paul Brown’s conviction had been expunged, which I acknowledged to him both privately and publicly. At all times, however, I believed what I said to be true.
Didn’t you learn that the criminal record was expunged early on, maybe even the day of the taped call. You are saying it took you 6 weeks to figure out he was not a felon? Why was it 6 weeks later that you ended up doing the NSOL cover…with the cover story being, that you just found out you were wrong about his criminal past. Was not the company still a scam according to you? So the entire reason you thought NSOL was a scam was because the President had a criminal history? Somehow I would think you would still trade the scam as a short. Why wouldn’t you? Were you paid off to stop or something? So they gave you the shares at a discount, and then you call the dogs off. How could a jury ever convict you on extortion?
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11. FBI Tap
In the middle of trial I learned for the first time ever purely by accident that the NY FBI office had obtained an undercover membership on my private site. The NY FBI office had signed up undercover on my site as a regular subscriber/member beginning December 7, 2001 through my arrest in May, 2002. They were present, and monitoring the site in real time. They started several weeks after September 11, and two weeks before Royer left the FBI.
During the time these “illegal activities” were allegedly ongoing in private chat rooms, the NY FBI had the capacity, at ANY TIME, to log the chat in any of those chat room, and preserve those logs to aid in their prosecution of whatever crimes they thought were being committed. In other words, they had the opportunity to monitor, capture and preserve the best evidence in the world. They had complete and unfettered access to every audio broadcast from December 7, 2001 through May 22, 2002, the day of my arrest, and chose to preserve and capture none of that. Instead they had to rely on Cleveland to describe what was said in those chat rooms and on the audios.
What a bunch of morons those FBI guys are, they watched you, they found your criminal actions, the criminal actions of Royer, and then they took you two court, and gained a decisive verdict against you was judged by a jury of your peers. And then of all thing they take direct testimony in a court room…they have Cleveland say what he was doing…instead of entering in hearsay evidence. When in doubt raise the ire of a potential conspiracy I suppose, but it sure looks like you were caught red handed.
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12. Paul Brown / Extortion
...there was nothing secret, hidden or covert about the NSOL transaction. In fact very few of the thousands of trading calls I made were as well advertised or explained.
The truth is that it was Paul Brown himself who sought help from others to see how he could get rid of the short sellers.
He actively pursued a meeting with me to get me out of his stock; ……. Nassar, like Paul Brown, was operating a scam company, and wanted the short sellers out of his stock.
Why? Because short sellers make noise, tell the truth to the public and expose the lies generated by the company..
My requirement for covering NSOL and not publicly or privately discussing NSOL was simple.
I agreed to terminate coverage of NSOL if Mr. Brown could prove to me that he was not a convicted felon, which he did.
So Brown was trying to remove shorters. You had been calling him up and talking to him about his “criminal past” and broadcasting that out to 300 other shorters. You say he has a scam company. But then you buy a bunch of cheap stock, and have everyone you know cover their shorts. For what reason? You say because he proved he was not a felon. But it was still according to you a scam company right? So why cover? And why stop others from trading the scam company. What could it be? What could it be?
Could it be the guaranteed profit they gave you on 325,000 shares. An easy 50 free cents per share? Well according to the Jury its because you Extorted the man. He became convinced if he did not pay you off you would not stop, you were calling him up at his office, you were taping him, and broadcasting those conversations out. So he indeed did pay up. And what did you do after he paid up….you stopped shorting his stock….which you insist was a scam…and you had everyone else stop. And after he paid up the extortion stopped, the goons left.
This is extortion 101 and its only a surprise to you that your were convicted.
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13. FBI Coverup
That is why I believe there WERE recordings, and they DID save the chat logs which, when they proved to be exculpatory, then disappeared.
Your site Administrator had all the logs. What days are logs missing? The FBI must have some sort of info that makes you innocent? Can you recall anything that would make me innocent? You don’t offer anything do you?
What would the FBI have that makes you innocent, THAT WAS said publicly in chat?
Maybe you said you had your fingers crossed behind your back when you shaking down Brown for the cheap stock. Maybe you said “do over”?
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14. Non-Reliance on FBI Info to Trade
My position is and always has been that knowledge of an SEC or FBI investigation is useless for trading purposes, despite the prosecutions characterization to the contrary.
Okay we agreed that you were not stupid at the start of this, but now you want to portray everyone reading your words as being stupid. Serious what can of morons and fools do you think the rest of the world is? Pre-knowledge of an SEC investigation that is confidential is of course information you traded on.
And when the investigation became public you bragged about how good you were. And upon learning of the investigation the stocks tanked.
No its one thing to assume we are stupid, its another to think the Jury is stupid. Somehow you find yourself wrong on both, and your are caught with your pants down.
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15. Sentencing Inequity
Mr. Elgindy you are not sentenced yet. Others plead out. They won’t get the same sentences as you. Maybe you should have had a talk to your lawyers about how this works. It’s a criminal justice system; you lawyers should have explained how it works. They also did not get lower than market shares in exchange for removing yours and your site members’ shorts.
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16. Implications
For the first time, telling the truth about a company can be considered “manipulation.”
Sorry Mr. Elgindy, read what the Judge says in the transcripts, he understands what shorting is. He understands that talking about legal transactions is fine.
What you did was have access to non-pubic information. The FBI testified that the information you posted could have only come from their database.
For the first time, even one’s own research can be considered “non-public information.” The unfortunate reality is that in their zealous drive to destroy me, you all have been silenced as well.
Mr. Elgindy it’s sad about you. But what is sad is that you are guilty, and the jury found you so for good reason. They also found you innocent of things for good reason to.
But you don’t have to look any further than your own mirror to see what cause all this. Somehow sadly you believe you own BS now. You believe you unbelievable cover stories. But again you are a smart guy, and a smart guy like you does not find himself doing this stuff over and over without thinking about it.
The problem is for the court there is little in your remarks here to think if you were give a light sentence that you would not simply go out and do it again.
You did all this while on probation.
This trial had nothing to do with the truth. It was a contrived affair from the first day Mr. Breen stood in that California courtroom making 9-11 allegations that had no merit or foundation. Witnesses were intimidated from day one. The search for justice took a backseat to a prosecutor’s ambition, rabid zeal and refusal to concede the truth. The pressure of prejudice, intimidation, and the overwhelming power of the prosecutor’s office succeeded in obscuring the truth and confusing the jury. I believe there was willful disregard for the truth, and serious misconduct that should frighten and offend every American.
You have no remorse for what you have been found guilty of. I think the judge should take note, and rule on your sentencing accordingly.
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